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Pros and Cons of Secured Loans - [BACK]

Savvy borrowers know that there can be benefits in selecting a secured loan to consolidate existing debt into a single monthly repayment. This really depends on how the interest is calculated which can vary from lender to lender.

The recent boom in property prices has allowed many a home owner with considerable equity which is locked up in their property. By releasing some of this equity by re-mortgaging or taking at a secured loan, it is feasible that the home owner can save considerable sum on their existing debt repayments.

The APR that bank will decide to lend to each person at is a function of how risky an investment they are regarded to be. The inherent or baseline level of risk associated with each borrower has recently risen to the current credit crunch, so the cheap loans of yesterday will become fewer and farther between. However, it will still be possible to get a good rate if you are deemed to be a less risky investment by the bank. This is decided by how good your credit rating is and whether you have defaulted on any payment over the last 6 years.

Lenders prefer that larger loans are secured on a home in order to limit their risk. Typically these secured loans are repaid over 10-25 years at a significantly better rate of interest than is the case with unsecured forms of debt. If you already have a lot of high interest unsecured debt and equity tied up in your property, it may be advantageous for you to speak to a financial advisor about a secured loan.

The tables below show a summary of typical rates for some lenders (all rates accurate at time of writing):

Lender Loan Type Typical Rate
ASDA Finance Secured Loans Typical 7.6%
Alliance & Leicester Secured Loans Typical 7.9%
Norton Secured Loans Typical 9.9%
Nemo Secured Loans Typical 10.3%

Lender Loan Type Typical Rate
ASDA Finance Unsecured Loans Typical 6.9%
Natwest Unsecured Loans Typical 6.9%
RBS Unsecured Loans Typical 6.9%
Alliance & Leicester Unsecured Loans Typical 6.5%
Moneyback Bank Unsecured Loans Typical 6.3%

For current rates take a look at fool.co.uk loans.

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Mortgages2homes Limited introduces clients to a Panel of Mortgage Brokers who are authorised & regulated by the Financial Services Authority. Mortgages2homes Limited are not authorised or regulated by the Financial Services Authority, the content of this web site is "information" on the services that are offered by our partner advice companies, and must not be taken or used as "advice" on the type of mortgage that is most suited to your needs. Buy to Let & Commercial Mortgage services are provided by The Money Centre. Whilst every effort is made to ensure that the information published on these pages is accurate, no liability can be accepted for any inaccuracies or any loss suffered as a result and Mortgages2homes Limited hold no responsibility for any advice given by our partner companies.

Written quotations are available on request from our partner advice companies. All loans subject to status, a life policy, or other insurance may be required, ensure you are aware of the complete details that apply in your situation.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE

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